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HomeMy WebLinkAboutOrdinances (O-91-834)-08/06/1991 1 ~~9j 1.' 8tJp, IJt 17. 2 3 ORDINANCE 0-91-834 4 AN ORDINANCE AMENDING CHAPTER 1 SECTION 12 OF THE COLLEYVILLE CODE INVESTMENT POLICY BY THE ADOPTION OF EXHIBIT "A" AND THE REPEAL OF 5 ORDINANCE 0-87-662: EFFECTIVE DATE. WHEREAS, the city Council has received the recommendation of the 6 city Manager and Finance Director for the amendment of the investment policy established by Ordinance 0-87-662; 7 WHEREAS, the City Council deems it is in the best interest of the city to adopt an investment policy in order to maximize the return upon legal and lawful investments of the City; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEYVILLE, TEXAS AS FOLLOWS: 10 Sec. 1 : THAT Ordinance 0-87-662 is hereby repealed. 11 THAT Chapter 1 Section 12 be amended to as read as indicated in Exhibit "A" - City of colleyville Investment Policy. Sec. 2: 12 13 THAT this Ordinance shall become effective on the date of passage. ' Sec. 3: 14 AND IT IS SO ORDERED. . . " tf/' cI; hear~ng be~ng conducted on the~ 15 16 The day The day 17 18 The day 19 CITY OF COLLEYVILLE ---, ~- ~~. ..~" -" .-://' .' ",' ~ .~ (......':' (.~ .~/~~ Chr~s Hawk~n ~ Mayor 20 21 lada Johns City Secretary 22 ~l'~~D Al-l: AND_LEGALITY: Ror:fq &os er City Attorney 23 24 25 26 20 21 22 23 24 25 Ordinance 0-91-834 Page 2 1 2 EXHIBIT "A" 3 CITY OF COLLEYVILLE INVESTMENT POLICY 4 5 Scope This investment policy applies to all financial assets of the City of colleyville. These funds are accounted for in the City's comprehensive Annual Financial Report and include: 6 7 General Fund utility Fund Capital Recovery Fund Debt Service Fund Voluntary Park Fund Capital projects Fund sesquicentennial Fund Special Donation Fund and any new fund created by the governing body, unless specifically exempted by the governing body. 8 9 10 11 12 13 Objectives Safety of principal is the foremost objective of the City in managing its portfolio. The city will also maintain sufficient liquidity to provide adequate and timely working funds. The City'S investment portfolio shall be designed with the objective of regularly exceeding the weighted average return on thirteen week Treasury bills. This is considered a benchmark for riskless investment transactions, and therefore, is a minimum standard for the portfolio's rate of return. 14 15 16 17 For bond funds which fall under the arbitrage provisions of the Tax Reform Act of 1986, the City will attempt to earn allowable bond yield with market conditions permitting. Deleqation of Authority 18 19 The City Council designates the Investment Officers to be the City Manager with overall responsibilities to see that investment objectives are accomplished and the Finance Director with the specific day-to-day performance of managing the local funds of the City. 26 20 21 22 23 24 25 ordinance 0-91-834 Page 3 1 2 3 Prudence 4 The standard of prudence to be used by investment officials shall be the "prudent person" which means the officer may not be an expert but is obligated to act responsibly and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 5 6 7 8 Internal controls 9 The Finance Director shall establish a system of written internal controls which shall be reviewed annually by the independent auditor. The controls shall be designed to prevent the loss of public funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions. 10 11 12 Permissible Instruments 13 The following is a list of permissible instruments as authorized by the 70th Texas Legislature in the Public Funds Investment Act (TEX. REV. CIV. STAT. ANN. ACT 842A-2) and amended by the 71th Legislature: 14 15 1. obligations of the united states or its agencies or instrumentalities; 16 2. direct obligations of the state of Texas or its agencies; 17 3. other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the united states or its agencies or instrumentalities; 18 4. obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality by nationally recognized investment rating firm and having received a rating of not less than "A" or its equivalent; 19 5. certificates of deposit issued by state and national banks and domiciled in the state that are: a. guaranteed or insured by the Federal Deposit Insurance Corporation, FSLIC or its successors; or b. secured by obligations that are described by subdivisions (1) through (4) of this subsection which are intended to 26 10 11 12 13 14 15 16 17 18 Ordinance 0-91-834 Page 4 1 2 3 include all direct federal agency or instrumentality issued mortgage back securities, and that have a market value of not less than the principal amount of the certificates or in any other manner and amount provided by law for deposits of the investing entities; 4 5 6 6. invest in a local government investment pool as authorized by the Interlocal Cooperation Act (TEX. REV. CIV. STAT. ANN. ACT. 4413 (32c), as amended, and the Public Funds Investment Act (TEX. REV. CIV. STAT. ACT. 842a-2), as amended. 7 8 Diversification 9 The City will attempt to limit the risk of loss through diversification of its portfolio in the areas of instruments and maturities. Diversification bv Instrument Maximum Percent of portfolio u.s. Treasury Obligations (Bills, Notes and Bonds) 100% u.s. Government Agency Securities and Instrumentalities of Government sponsored corporations 75% certificates of Deposit (CD's) Commercial Bank's 75% Local Government Investment Pool 75% Maturitv Schedulinq 19 Investment maturities for idle funds shall fall within these minimums: 20 21 22 23 24 25 26 Under 6 months 75% minimum Under 1 year 85% minimum Under 18 months 90% minimum Under 2 years 95% minimum Under 7 years 100% minimum 22 23 24 25 Ordinance 0-91-834 Page 5 1 2 3 competitive selection of Investments On all funds available for investment which fall outside the scope of the then current depository contract, oral bids shall be requested from at least two broker/dealers or national banks. The city will accept the bid which provides the highest rate of return within the maturity required and within the parameters of this policy. 4 5 6 7 Records will be kept of the bids offered, bids accepted, and a brief explanation of the decision which was made regarding the investment. 8 9 Qualified Institutions 10 Each year in June the city Council shall approve five financial institutions for investment purposes as recommended by the Finance Director. All firms shall answer the Broker/Dealer questionnaire (Appendix A) and submit their most recent audited financial statements to the city before June 1st for evaluation of credit worthiness. All personnel in the firms who will be trading or quoting securities to the City must maintain a current NASD license and be registered to deal securities in the state of Texa~. Safekeeping All marketable securities purchased by the city shall be held in third party safekeeping by an institution designated as primary agent. All securities will be delivered to the third party institution by seller. Personnel in the third party institution will verify the correct security was delivered by the seller ("delivery vs payment"). The third party institution shall issue a safekeeping receipt to the City listing the specific instrument, rate/yield, maturity, CUSIP, and other pertinent information. Collateral on deposit type securities which exceed the FDIC coverage shall be held in the Federal Reserve Bank,the state of Texas Treasury Safekeeping Trust, or a third party safekeeping institution. In the event a third party safekeeping institution is used, a collateral agreement shall be executed between the city, depository which issued the CD, and the third party custodian of the collateral. The city will retain possession of all original safekeeping receipts and the receipts will state the security is pledged to the City of Colleyville. 11 12 13 14 15 16 17 18 19 20 21 Either the City Manager or the City Secretary must approve release of collateral in writing prior to its removal from the safekeeping account. 26 10 11 12 13 14 15 16 17 18 Ordinance 0-91-834 Page 6 1 2 3 collateral Securities for Certificates of Deposit and Demand 4 Accounts 5 The City will accept as collateral for its certificates of Deposit and demand accounts the following securities: 6 A. FDIC coverage 7 B. U.S. Treasury bills, notes and bonds C. u.s. Agency and instrumentalities bills or notes 8 9 D. GNMA mortgage backed fully modified pass through securities E. Texas state, city, county, school bonds with a remaining maturity of seven years or less and a rating of "A" or better by Moody's and Standard and poor's. Collateral shall be marked to market monthly by the Finance Director. The following percentages constitutes the minimum market value for collateral instruments which are pledged for the City's certificates of Deposit and demand deposits. Form of Collateral Pledqed Collateral Ratio 1. U.S. Treasury bills, notes, and bonds a. maturing within 1 year b. maturing in 1-5 years c. maturing in more than 5 years 102% 105% 110% 2. Actively traded u.s. Government Agency securities a. maturing in less than 1 year b. maturing in 1-5 years c. maturing in more than 5 years 103% 107% 115% 115% 3. GNMA mortgage pass through securities 20 4. Entities in the state of Texas bonds 19 21 22 23 24 25 26 General obligation bonds a. maturing in less than 1 year b. maturing in 1-5 years c. maturing in more than 5 years 102% 105% 107% 24 Ordinance 0-91-834 Page 7 1 2 3 Revenue bonds 4 a. maturing in less than 1 year b. maturing in 1-5 years c. maturing in more than 5 years 105% 110% 115% 5 6 Collateral shall be audited annually be the city's independent auditor and may be audited by the City at anytime during normal business hours of the safekeeping bank. 7 8 :Indemnity 9 The Finance Director and Deputy Finance Director shall be personally indemnified in the event of investment loss provided the Investment Policy is followed. Reporting Requirements 10 11 12 The Finance Director shall issue a written report annually concerning the city's investment transactions for the preceding year and describing in detail the investment position of the City as of the fiscal year's end. The report shall be signed by ~oth the city Manager and the Finance Director. 13 14 15 16 17 18 19 20 21 22 23 25 26 APPENDIX IlAIl CITY OF COLLEYVILLE BROKER/DEALER CERTIFICATION QUESTIONNAIRE 1. Name of Firm 2 . Address 3. Telephone - National Local 4. Primary Representative / Branch Manager 5. Is your firm a primary dealer in u.s. Government securities? If so, how long? 6. Identify all personnel who will be trading or quoting securities to our City's employees. 7. Identify which personnel have read the City of Colleyville's investment policy. 8. Please indicate the current licenses of your representative and attach a copy of their registration. Agent Licensed or Registered by 9. Have any of your public sector clients ever reported to your firm, its officers or employees, orally or in writing, that they sustained a loss (in a single year) exceeding 10 percent of original purchase price on any individual security purchased through the firm? 10. Please explain your normal custody and delivery process. Who audits these fiduciary systems? 11. Has your firm consistently complied with Federal Reserve Bank's capital adequacy guidelines? As of this date, does your firm comply with the guidelines? 12. By what factor does your firm presently exceed the capital adequacy guidelines. 13. Please attach a sample of any confirmations or transactions reports that the City will receive after a transaction has occurred. 14. Does your firm participate in the S.I.P.C. insurance program? 15. What percentage of your transactions failed last month? Last year? 16. Describe the precautions taken by your firm to protect the interests of the public when dealing with governmental agencies as investors. 17. Please attach a copy of your firm's most recent audited financial statements.